HSBC Fined $35 Million for Billing Practices on Credit Card Add-On Products
HSBC Bank USA reached an agreement with the Office of the Comptroller of the Currency (OCC) last week, which resolved a regulatory review of past billing practices related to credit card add-on products. HSBC Finance Corporation will pay the United States Treasury a civil money penalty of $35 million.
In addition to the civil penalty, HSBC will refund product fees and related charges to both existing and former affected customers. The total amount of customer refunds has not yet been determined.
The OCC found that HSBC practices violated the FTC Act, which prohibits unfair and deceptive practices.
The services in question were provided by CreditKeeper, which was a credit-monitoring program marketed and sold by the bank and its affiliate HSBC Bank Nevada, which ceased to exist in 2013. Anyone who enrolled in and paid for this service between January 2004 and May 2012, but did not receive the full benefit of the product, will be eligible for restitution. This will include the amount paid as well as any associated over-limit fees, finance charges and interest.
The OCC has also demanded that HSBC improve their governance of third-party vendors, particularly those associated with add-on products; create a risk management program; and develop a consumer compliance audit program.
HSBC said it stopped selling credit card add-on products in 2012, and sold its card and retail services business that same year.